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South African Revenue Service clarifies tax treatment of cryptocurrencies

South African Revenue Service clarifies tax treatment of cryptocurrencies

CAPE TOWN: South Africans who own cryptocurrencies such as Bitcoin, Litecoin, Ethereum of any of the hundreds of others need to declare gains or losses on their tax returns, according to the SA Revenue Service. More to that they stated that even though cryptocurrencies do not contribute cash income collected from crypto transactions can be taxed under the gross income. Newburgh Gazette http://newburghgazette.com/2018/04/11/south-african-revenue-service-clarifies-tax-treatment-of/The first important insight from the Sars statement is that it will treat cryptocurrencies as intangible assets and not as conventional currencies.

Alternatively, SARS says, such gains may be regarded as capital in nature, as spelt out in the Eighth Schedule to the Act for taxation under the CGT paradigm. Taxpayers are, naturally, required to clearly declare all of their losses and gains on the cryptocurrency market. It also included a provision for claiming expenses related to cryptocurrency activities. By verifying these transactions the “miner” is rewarded with ownership of new coins which become part of the networked ledger. Additionally, it won’t require “VAT registration as a vendor for purposes of the supply of cryptocurrencies”. Until cryptocurrency that is acquired through mining is bartered or exchanged for fiat, it is considered “held as trading stock”. This transaction is regarded as a barter transaction. SARS points out that the 2018 annual budget review indicates the value-added tax (VAT) treatment of crypto-currencies will be reviewed.